Innovation for poverty reduction: Agricultural R

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Innovation for poverty reduction Agricultural
RD William A. MastersPurdue
Universitywww.agecon.purdue.edu/staff/masterswww
.agecon.purdue.edu/prizesCropLife International
Conference on Intellectual Property in
Development22 February 2006
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New technologies are increasingly important for
sustained growth in rich countries
Decomposition of output growth in U.S.
agriculture, 1800-1990
Source Yair Mundlak (2005), Economic growth
Lessons from two centuries of American
agriculture. Journal of Economic Literature,
forthcoming.
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and most of the tropics are still trapped in
low-income agriculture
Source J.D. Sachs, 2001. Tropical
Underdevelopment. NBER Working Paper 8119.
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Poor countries lack of food is stillthe worlds
greatest health threat
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Undernutrition is gradually being eradicated in
all major regions except Africa
Data and projections on childhood underweight,
1995-2015
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Asias success is closely tied to sustained
growth in food production
Source calculated from FAO data, at
http//apps.fao.org.
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To match Asias success, Africa has a lot of
catch-up to do
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There are diminishing returns to inputs, e.g.
simply adding more fertilizer
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Sustaining and extending growth requires new
technologies, e.g. new varieties
Source Calculated from data in R.E. Evenson and
D. Gollin (2003), Crop Variety
Improvement and its Effect on Productivity.
Wallingford CABI.
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Africa has had remarkably low public investment
in crop improvement
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IPRs alone are not the answerPrivate RD builds
on public investment
Netherlands
Sweden
France
UK
NZ
US
Notes Calculated from IFPRI (2003), available
online at www.asti.cgiar.org. Data refer to
various years from 1971 through 2000, and exclude
the chemical and machinery sectors.
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RD has varied but high payoffsin all regions,
including Africa
Estimated return to agricultural research and
extension (/year)
Almost all assessments show returns above 10
cost of capital
A few studies document blockbuster discoveries
Source Alston, J.M., M.C. Marra, P.G. Pardey,
and TJ Wyatt. 2000. "Research returns redux A
meta-analysis of the returns to agricultural
RD." Australian J. of Ag. and Resource Econ.,
44(2) 185-215.
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but sustaining foreign aid for agricultural RD
has been difficult!
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New funding mechanisms may help

• The value of successful food-crop techniques is
  spread among poor people in the target region
• Even with strong IPRs, private firms cannot
  capture much of their value added
• Donors have difficulty contracting for
  appropriate RD or dissemination efforts
• but the value of new techniques can be measured
  after adoption, so donors could pay innovators
  then
• payments can be proportional to measured value
  added, after subtracting any value captured
  through input sales
• innovators would choose if and when to apply for
  payment, by submitting adoption data for
  verification by a secretariat
• a system for such proportional prize payments
  is documented at www.agecon.purdue.edu/prizes

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Conclusions

• Extending economic growth requires sustained
  technological innovation, especially for food in
  the poorest regions
• to improve nutrition, health and schooling
• to free resources for other sectors
• Existing funding mechanisms are failing to
  sustain output growth where its most needed
• improved IPRs are important, but
• increased public investment is needed first
• prizes and other new funding mechanisms may help
  align RD incentives with farmers needs